[progress]

A friend aked if I would Co-sign for him on a six hundred thousand dollar home because his credit score is below seven hundred. If I did this, what would my legal obligations be. Can I go back a revoke at any time.

[LisaB4657]

If you co-sign then you are personally responsible for paying back the loan in the event your friend does not do so. You cannot revoke. The only way out is if: (1) your friend pays off the loan in full; (2) your friend refinances with a new lender and your name is removed as the co-signer; or (3) if the lender agrees to remove your name as the co-signer. The third option is highly unlikely.

If you co-sign and your friend defaults on the loan, then the lender would foreclose on the property and have it sold at auction. If it sells for less than the amount of the loan then the lender would come after you for the balance. In addition you would have a substantial hit against your credit and it would take years to recover.

I strongly recommend that you do not co-sign.

[tkrussell]

Co-signing for any loan or mortgage is a huge responsibility that should not be taken lightly by the cosigner, as is, unfortunately,the case with many of the people that need a cosigner. Not necessarily their original plan to stop paying, but stuff happens.

Your legal responsibility to the loaner will be to pay any and all debt, to include the principal amount of the loan not paid, interest, taxes and fees not paid by the cosignee, your friend, in the event he does not fulfill his obligation of making his monthly payments promptly.

Should he, the friend, default and stop paying his mortgage payments after 2-3 months,you will be the next in line receiving demand to pay letters from the loaner,bank,mortagage company, etc.

Unless you can have the purchase contract written to include a waiver stating you can back out any time,which I doubt, then there is no way to back out. The mortgage will need to be refinanced and rewritten, with someone held responsible to pay the amount due, plus fees,etc.

I am no real estate or financial or legal expert, only someone that has been on both sides of the fence, so to speak, and have done both with eyes wide open.

This can be a recipe for disaster, you will lose this person as a friend, as soon as he has any problems paying. Think carefully about this before signing anything, and certainly hire your own attorney( I say this so you do not end up using your friend's lawyer) before proceeding with signing any note or contract.

[excon]

Hello progress:

Co-signing involves a lot of risk, as you've learned. However, risk is cool if you are rewarded commensurately. Evidently, while your friend is credit poor, he is cash rich. His payments are going to be around $5-6 grand a month.

I would do it, only if (1) you are co-PURCHESER, instead of just co-signer on the loan, (2) that he pays all principal, interest, taxes and insurance, (3) that you agree to split 50/50 ANY equity increases, and (4) that he pay you 10% of his payment every month until you are excused.

excon

[CaptainForest]

DO NOT DO IT!!

The bank is giving you a warning, THEY won't lend him money, and neither should you.

The bank, who is in the business of LEDNING people money, feel he will not pay.

If that happens, guess what? They will come after YOU.

Can YOU afford the monthly mortgage payment?

Can you afford for YOUR credit to go in the toilets.

He does not have the credit for this home, his problem. He needs to work on improving his credit.

Do Not Co-sign, because if you do, it will simply cause you a headache later.

[s_cianci]

If you co-sign for this loan and he defaults, you can and will be held responsible for paying it. $600,000 is quite a hefty amount. If he can't qualify for a loan because his credit isn't good enough then he's a bad risk and I certainly wouldn't co-sign for a loan for him.

[Dr D]

In the case of mortgages, the co-borrower is on the title to the property as well as the note, and other documents. The purpose of a co-borrower (on a mortgage) is to compensate for insufficient income from the primary borrower, not for credit. It has been said that a borrower with poor credit could have Donald Trump as a co-borrower and still not be allowed on the mortgage. Your friend's credit score in the high 600s should enable him to get a standard mortgage with a reasonable down payment. If he is trying to get one of the whiz-bang (stated income or no doc) products he could have a problem. I would not do it for all of the reasons that the previous posts have stated.

[beingtakenbyloverboy]

A friend aked if I would Co-sign for him on a six hundred thousand dollar home because his credit score is below seven hundred. If I did this, what would my legal obligations be. can I go back a revoke at any time.

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